American Enviro Products, Inc

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IN THE MATTER OF AMERICAN ENVIRO PRODUCTS, INC., ET AL.

CONSENT ORDER, ETC., INREGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3376. Complaint, Mar. 18, 1992--Decision, Mar. 18, 1992 This consent order prohibits, among other things, a California-based disposable diapers company and its corporate officers from making unsubstantiated degradability or environmental benefit claims for any plastic product or plastic packaging in the future.

Appearances For the Commission: Michael Dershowitz.

For the respondents: Phil Rudolph and Paul Blankenstein, Gibson, Dunn & Crutcher, Washington, D.C. COMPLAINT The Federal Trade Commission, having reason to believe that American Enviro Products, Inc., a corporation, and Robert D. Chickering and Michael V. Zullo, individually and as officers of said corporation, hereinafter sometimes referred to as respondents, have violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest alleges: PARAGRAPH 1. Respondent American Enviro Products, Inc. ("American Enviro") is a California corporation with its office and principal place of business located at 950 Fee Anna Street, Placentia, California.

Respondents Robert D. Chickering and Michael V. Zullo are officers of the corporate respondent named herein. They formulate, direct, and contro] the acts and practices of the corporate respondent. Their business address is the same as that of the corporation. Complaint 115 F.T.C.

The aforementioned respondents cooperate and act together in carrying out the acts and practices hereinafter set forth. PAR. 2. Respondents have, or have caused to be, advertised, offered for sale, sold, and distributed disposable diapers to the public under the trade name Bunnies.

PAR. 3. The acts or practices of respondents alleged in this complaint have been in or affecting commerce. PAR. 4. Respondents have disseminated or have caused to be disseminated advertisements and package labels for Bunnies diapers, including, but not necessarily limited to, the attached Exhibits A, B, C, and D. The aforesaid advertising and package labeling contains the following claims, among others:

BIODEGRADABLE BUNNIES These diapers can play a vital role in the disposal of plastic waste. Disposable diapers are one of the most serious environmental problems we have today. Every day in the U.S.A. over 50 million disposable diapers are thrown away. Their polymer plastic outer backing will last from 200 to 400 years in our landfills before they biodegrade.

Bunnies are constructed with a revolutionary outer backing. This backing contains biodegrading agents which, when combined with the polymer matrix, dramatically accelerate the biodegrading process so they biodegrade within 3-5 years. Bunnies and the plastic bag they are sold in are both made of this new biodegradable material and both will biodegrade before your child grows up. I5 1 5 5 1 2 772 1934 51 28 96.712128 felts 1 5 5 1 3 835 1939 55 23 96.741898 sorts 1 5 5 1 4 902 1933 33 29 96.969620 of5 1 5 5 1 5 944 1933 89 37 96.855186 guilty5 1 5 5 1 6 1045 1933 82 28 96.224907 when5 1 5 5 1 7 1139 1933 11 28 89.363571 I5 1 5 5 1 8 1162 1933 85 28 96.844528 threw5 1 5 5 1 9 1261 1941 79 28 96.822151 away5 1 5 5 1 10 1353 1933 59 36 96.296356 (my5 1 5 5 1 11 1424 1933 108 36 95.244354 baby's)5 1 5 5 1 12 1546 1932 164 37 96.809906 disposable5 1 5 5 1 13 1722 1932 120 37 96.550606 diapers.5 1 5 5 1 14 1866 1932 128 28 96.458107 Bunnies4 1 5 5 2 0 659 1978 1325 38 -1 5 1 5 5 2 1 659 1989 66 20 96.492790 uses5 1 5 5 2 2 738 1980 222 36 96.492790 biodegradable5 1 5 5 2 3 973 1979 100 37 96.842827 plastics 1 5 5 2 4 1086 1979 44 28 96.991364 for5 1 5 5 2 5 1141 1980 46 27 96.901550 thes 1 5 5 2 6 1199 1979 73 28 96.996460 backs 1 5 5 2 7 1285 1979 77 28 93.303879 sheets 1 5 5 2 8 1375 2001 34 6 90.665344 ....5 1 5 5 2 9 1423 1979 79 27 96.887711 Even5 1 5 5 2 10 1514 1978 72 28 96.996559 theirs 1 5 5 2 11 1596 1979 70 35 97.008232 bags5 1 5 5 2 12 1679 1987 46 19 97.007240 ares 1 5 5 2 13 1737 1978 247 36 95.714706 biodegradable. PAR. 5. Through the statements referred to in paragraph four and others in advertisements and package labeling not specifically set forth herein, respondents have represented, directly or by implication that:

1. Compared to other disposable diapers, Bunnies disposable diapers offer a significant environmental benefit when consumers dispose of them as trash that is buried in a landfill. 2. Bunnies disposable diapers and their plastic package bags will completely break down, decompose, and return to nature within 3 to 5 years.

AMERICAN ENVIRO PRODUCTS, INC., ET AL. 401 399 Complaint 3. Bunnies disposable diapers will break down, decompose, and return to nature significantly faster than other disposable diapers after consumers dispose of them as trash that is buried in landfills. PAR. 6. Through the statements and representations referred to in paragraphs four and five, and others not specifically set forth herein, respondents have represented, directly or by implication, that at the time they made such representations, respondents possessed and relief upon a reasonable basis for such representations. PAR. 7. In truth and in fact, at the time respondents made such representations, respondents did not possess and rely upon a reasonable basis for such representations. Therefore, the representation set forth in paragraph six was, and is, false and misleading. PAR. 8. The acts and practices of respondents as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section S(a) of the Federal Trade Commission Act.

Complaint LIS F.T.C.

EXHIBIT A When your babies grow up...

will they still be living in diapers? uTREE G 1M nate DI LARG re as, with Your choice today could make the difference. A good choice for your baby today. A better choice for your baby’s tomorrow. Bunnies have all of the features you look for ina disposable Disposable diapers are one of the most serious environdiaper (and cost no more than ordinary national brands). mental problems we have today. Every day in the U.S.A. «Super absorbent centers combine a specialized fabric over 50 million disposable diapers are thrown away. with a non-toxic anti-wetness ingredient, locking moisture Their polymer plastic outer backing will last from 200 among the inner most layers - away from baby’s skin. to 400 years in our landfills before they biodegrade. Stay dry liners provide a protective screen that repels Bunnies™ are constructed with a revolutionary outer wetness while caressing baby's skin with softness. backing. This backing contains biodegrading agents * Elastic legs with gentle gathering strands work which, when combin with the to prevent leakage and give a trim and polymer matrix, dramatically comfortable fit om accelerate the biodegrading process so they biodegrade Reusable, no-tear closure within 3-5 years. tabs hold reo Bunnies and the plastic bag they are sold in are both check for wetness as often as you like.

¢ Blue moisture barrier at waist helps prevent leakage when your baby Is lying down.

made of this new biodegradable material and th will biodegrade before your child grows up.

© 1999 AMERICAN ENVIRO PRODUCTS. DYC Available at fine stores everywhere.

950 Fee Ana Street. Placentia, Califomma 92670 EXHIBIT A AMERICAN ENVIRO PRODUCTS, INC., ET AL. 403 399 Complaint EXHIBIT B PRODUCT BUNNIES DIAPERS PROGRAM. CBS THIS MORNING 3/26/90 30 SEC. cas-TV (NEW YORK) 8:49AM 1. WOMAN: I have a confession 2. | felt sort of guilty when 3. They! i ; : - . t | to make about my baby. | threw away her disposable rast as abet ee diapers. Still be around when she grows up.

6. Even their bags are 4. So we changed to Bunnies. 5. and they're ultra Bunnies uses biodegradable ts h 1 i plastic for the back sheet, Poe Oe a otyeriners. ond biodegradable. reusable tape tabs.

7. Biodegradable Bunnies 8. for my bab: 9 . it's definitely the eight y baby, and her babies. thing EXHIBIT B Complaint EXHIBIT C } Hl it gil Hal i i i { I H ] i h Hi Hi aX.

Sma, DE Tonto newt oon E ; EXHIBIT C _ BIODEGRADABLE T ULTRA “28: DISPOSABLE DIAPERS = ! ath Eu git eat g ill > gi E 6OsmaALL wit 1 Blue moisture barrier t |e Refastenable cl For babies 6 to 14 pounds * Stay dry liner osure tabs © Biodegradable outer shell 2 z geogeses aie ae ea i 3 j 7ae R i Ging) gaan bd i 3 gic a anh 7 dhes cit i il: bj stpbat 8 ges le 33 582 $2 aESRRE E25 5 185 Be g Sees es AMERICAN ENVIRO PRODUCTS, INC., ET AL.

Complaint EXHIBIT D a 3 atte ion ry ALMlavavasiaoig aAaCoIg > .

fe lesttatets a 1 2 Hi / & EXHIBIT D Decision and Order 115 F.T.C.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission's Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, and having duly considered the comments filed thereafter by interested persons pursuant to Section 2.34 of its Rules, now in further conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby makes the following jurisdictional findings and enters the following order:

1. Respondent American Enviro Products, Inc. is a California corporation, with its office and principal place of business at 950 Fee Anna Street, Placentia, California. The respondents Robert D. Chickering and Michael V. Zullo are officers of said corporation. In their respective capacities as officers, they formulate, direct and control the acts and practices of the corporate respondent. Their business address is the same as that of said corporation. AMERICAN ENVIRO PRODUCTS, INC., ET AL. 407 399 Decision and Order 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents and the proceeding is in the public interest.

ORDER DEFINITION For purposes of this order, the following definition shall apply: “American Enviro plastic product’ means any product or product packaging composed of plastic, in whole or in part, that is offered for sale, sold, or distributed to the public by respondents, its successors and assigns, under the Bunnies brand name or any other brand name; and also means any plastic product or product packaging that is sold or distributed to the public by third parties under private labeling agreements with respondents, its successors and assigns. I.

A. It is ordered, That respondents American Enviro Products, Inc., a corporation, its successors and assigns, and its officers, and Robert D. Chickering and Michael V. Zullo, individually and as officers of said corporation, and respondents’ representatives, agents, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, labeling, offering for sale, sale, or distribution of any American Enviro plastic product, including, but not limited to, disposable diapers and their plastic packaging, in or affecting commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication, by words, depictions, or symbols:

(1) That any such plastic product is degradable, biodegrad-4 1 9 1 2 0 518 2573 628 46 -1 5 1 9 1 2 1 518 2573 110 41 60.308502 able,”5 1 9 1 2 2 646 2584 40 24 92.190056 or5 1 9 1 2 3 702 2574 378 45 50.038017 photodegradable"; or, (2) Through the use of such terms as degradable, biodegrad-4 1 9 2 2 0 517 2690 1332 47 -1 5 1 9 2 2 1 517 2690 110 41 83.026970 able, photodegradable, or any other similar term or expression, that any such plastic product offers any environmental benefits com- Decision and Order 115 F.T.C.

pared to other products when consumers dispose of them as trash that is ordinarily buried in a sanitary landfill or incinerated, unless at the time of making such representation, respondents possess and rely upon a reasonable basis, consisting of competent and reliable scientific evidence that substantiates such representation. To the extent such evidence of a reasonable basis consists of scientific or professional tests, analyses, research, studies, or any other evidence based on expertise of professionals in the relevant area, such evidence shall be competent5 1 4 1 7 5 1199 1137 68 34 96.978416 ands 1 4 1 7 6 1280 1136 162 35 95.694000 reliable only if those tests, analyses, research, studies, or other evidence are conducted and evaluated in an objective manner by persons qualified to do so, and using procedures generally accepted in the profession to yield accurate and reliable results.

B. Provided, however, respondents will not be in violation of this order, in connection with the advertising, labeling, offering for sale, sale, or distribution of American Enviro plastic products, if they truthfully represent that their plastic products will compost, degrade into usable compost, or otherwise be converted into usable compost, when disposed of in facilities that collect municipal solid waste for composting (that is, the accelerated breakdown of waste into soilconditioning material), provided that the labeling of such products and any advertising referring to the degradability of such products discloses clearly, prominently, and in close proximity to such representation:

(1) That such products are not designed to degrade in landfills; and either (2)(a) That facilities to compost such products are generally unavailable in the U.S., or (2)(b) The approximate percentage of the U.S. population having access to composting programs for such products. If the advertising and labeling of respondents’ plastic products otherwise complies with Subpart A of Part I of this order, respondents will not be in violation of this order if they do not make the disclosures in this proviso (Subpart B).

AMERICAN ENVIRO PRODUCTS, INC., ET AL. 409 399 Decision and Order II.

It is further ordered, That respondents American Enviro Products, Inc., a corporation, its successors and assigns, and its officers, and Robert D. Chickering and Michael V. Zullo, individually and as officers of said corporation, and respondents’ representatives, agents, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, labeling, offering for sale, sale, or distribution of any American Enviro plastic product, including, but not limited to, disposable diapers and their plastic packaging, in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication, by words, depictions, or symbols, that any such product offers any environmental benefit, unless the specific nature of that benefit is clear from the context or is disclosed clearly, prominently, and in close proximity thereto; and, at the time of making such representation, respondents possess and rely upon a reasonable basis, consisting of competent and reliable scientific evidence that substantiates such representation. For purposes of this provision, a disclosure elsewhere on the product package shall be deemed to be in5 1 4 1 19 11 1480 1779 99 34 96.610077 closes 1 4 1 19 12 1591 1779 211 46 95.090965 proximity to such terms if there is a clear and conspicuous cross-reference to the disclosure. The use of an asterisk or other symbol shall not constitute a clear and conspicuous cross-reference. A cross-reference shall be deemed clear and conspicuous if it is of sufficient prominence to be readily noticeable and readable by the prospective purchaser when examining the package.

Il.

It is further ordered, That for three (3) years from the date that the representations to which they pertain are last disseminated, respondents shall maintain and upon request make available to the Federal Trade Commission for inspection and copying: A. All materials relied upon to substantiate any representation covered by this order; and Decision and Order 115 F.T.C.

B. All tests, reports, studies, surveys, or other materials in their possession or contro] that contradict, qualify, or call into question such representation or the basis upon which respondents relied for such representation.

IV.

It is further ordered, That respondent American Enviro Products, Inc. shall distribute a copy of this order to each of its operating divisions and to each of its officers, agents, representatives, or employees engaged in the preparation and placement of advertisements or other such sales materials covered by this order. V.

It is further ordered, That respondents shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondent, such as a dissolution, assignment, or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in the corporation which may affect compliance obligations under this order. VI.

It is further ordered, That each individual respondent named herein promptly notify the Commission of the discontinuance of his present business or employment and of his affiliation with a new business or employment. In addition, for a period of five (5) years from the service date of this order, the respondent shall promptly notify the Commission of each affiliation with a new business or employment whose activities relate to the manufacture, sale, or distribution of plastic products, or of his affiliation with a new business or employment in which his own duties and responsibilities relate to the manufacture, sale, or distribution of plastic products. When so required under this paragraph, each such notice shall include the individual respondent's new business address and a statement of the nature of the business or employment in which such respondent is newly engaged, as well as a description of such respondent's duties and responsibilities in connection with the business or employment. AMERICAN ENVIRO PRODUCTS, INC., ET AL. 411 399 Decision and Order The expiration of the notice provision of this paragraph shall not affect any other obligation arising under this order. VU.

It is further ordered, That respondents shall, within sixty (60) days after service of this order upon them, and at such other times as the Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with this order.

Complaint 115 F.T.C.